While business interruption insurance may not be a subject that pops to the top of most owners’ minds, this coverage protects the operation of your company in the event of a natural disaster or other events. This is why it’s essential to know what exactly is covered under business interruption policies. That's exactly what we'll tackle in this post.
An Overview of Business Interruption Policy
Business interruption insurance covers the financial losses that are incurred when business operations are interrupted due to a covered event. They are typically categorised as “all-risk” or “named perils” policies.
Let's look at a few examples of the types of events that may be covered under a business interruption policy.
Earthquake
Fire
Flood
Hurricane
Other natural disasters
These are some of the more common events, but there may be other covered events, depending on the policy in question.
When is a Business Insurance Policy Useful
Business interruption insurance is helpful in the above situations. The primary purpose of this type of policy is to cover the company’s loss of income in cases where the company is closed for some time due to an interruption. This policy will cover the costs to bring the business back to its pre-loss condition.
For example, let's say the company’s office is damaged due to a fire. The business has to be temporarily closed until the office space is fixed and the company can move back in. The costs of renting a temporary office, moving the company’s equipment and inventory to the temporary space and any costs to repair the temporary area would be covered by the business interruption policy.
How to Get Business Interruption Insurance
If you are interested in purchasing a business interruption policy, you can go through the same process as you would if you were going to buy any other type of business policy. However, you should keep in mind that business interruption policies tend to be more expensive than regular insurance policies. It’s good to consider a few different factors before purchasing a business interruption policy.
One of the factors to consider is whether the business you are starting up is seasonal. A seasonal business typically only operates during the months of the year when conditions are favourable. If a business interruption happened during these favourable months, the business would not be able to operate until the season was over. It may not be worth the expense if this is the case, as a business interruption policy would not pay out any money.
Another thing to consider is whether you are planning to have employees. If you do have employees, you must pay them, regardless of whether or not the company is operating. You can either pay them with money from your savings when the company is not operating or from insurance funds. However, if you only work for yourself, you can just stop working.
This is why it’s a good idea to think carefully about what types of situations may occur before purchasing a business interruption policy.
Protect Your Business
Business interruption insurance is an important part of a business owner’s arsenal of insurance policies. This type of insurance is designed to protect a company from losses due to business interruptions.
New Wave Insurance is a well-known business insurance provider in the Gold Coast. We will help you figure out the issues within your business. Book a FREE 15-minute consultation today.